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Weekend Edition

Why stocks are headed higher... for now
Saturday, July 13, 2013

 Fed Chairman Ben Bernanke spoke earlier this week... and stocks rallied.
Bernanke wanted to assure the world that he doesn't really intend to stop printing money... "Highly accommodative monetary policy for the foreseeable future is what's needed," he told a crowd in Cambridge, Massachusetts on Wednesday.
That's nothing really new. But it was enough to send the S&P 500 up 1% to 1,670 – above its all-time closing high of 1,669.1 on May 21.
 Meanwhile, gold jumped more than 2.5% to nearly $1,280 an ounce.
And gold stocks rallied... The Market Vectors Gold Miners Fund (NYSE: GDX) – which holds shares of most of the big publicly traded gold stocks – jumped as much as 6% on the news.
 His pro-easing comments followed the release of the June Federal Open Market Committee minutes, which showed nearly half of the 19 participants wanted to end the Fed bond-buying ("quantitative easing") policy by the end of this year.
But Bernanke's words took precedence over the split vote... though, once again, he said nothing new.
 Following Bernanke's mid-June announcement – when he said he saw a gradually improving economy – the market fell, while Treasury yields and volatility spiked. Investors thought the Fed would begin reining in (or "tapering") its $85 billion in bond purchases.
We knew that wasn't the case. As we wrote in the June 28 Digest Premium...
I expect this strength [in the dollar] will be short-lived... As the markets begin to crash, the yield on 10-year Treasurys begins to soar, and U.S. bonds begin to falter... Federal Reserve Chairman Ben Bernanke will have no choice but to extend and even increase the amount of purchases he's making (currently $85 billion a month).
And that is the trap. That's the final sign that all this – all these bad debts accumulated over the last 40 years – can only end at a giant inflation.
 For now, we'll enjoy the upward march in stock prices. But we know it can't last forever.
 While Steve Sjuggerud agrees we're on an unsustainable path, he believes there are more gains to come before things go bad. In fact, in Thursday's DailyWealth, he said all-time high stock prices shouldn't scare you away from the market...
You see, stocks hit a record high in 2000, not too far from today's levels, and then they crashed. The same thing happened in 2007.
Today, we're approaching record highs in stocks again... What makes today different from 2000 or 2007?
There is one huge difference between now and then. It's VALUE.
 As Steve points out, in 2000 (in the midst of the dot-com bubble), stocks traded for an average of 30 times their earnings – the highest price-to-earnings (P/E) ratio in 100 years of stock market history.
In 2007, just before the subprime crisis, stocks had a P/E ratio of more than 20. Today, the S&P 500 index trades at a more reasonable 14.9 times earnings.
Not many people agree with our view that the government's money printing is reckless and the outright theft of citizens. But one outspoken multimillionaire repeatedly hammers the government, the Federal Reserve, and anyone else involved in perpetuating these loose fiscal policies...
He even wrote a new book about the problems happening in America today... And essentially lays out a blueprint for protecting yourself from most these problems. And it's not just talk. He sold his $16 million Manhattan townhouse a few years ago and moved with his family to Singapore. He's positioning his portfolio to protect his wealth and hopefully profit from the economic crisis we're heading toward.
 As you may have guessed, I'm talking about Jim Rogers – one of the greatest investors of our time. He co-founded the Quantum Fund with George Soros in 1973.
In addition to making a fortune in the markets (and being a proponent of sound fiscal policies), Jim has also written some of the greatest investment books in history, like Investment Biker and Hot Commodities. That's why, when we heard Jim was releasing a new book, we bought thousands of copies to give to our readers.
When Jim speaks, we listen. It's a gift to have such a brilliant man walk you through the problems happening today in our country and the steps you can take to protect yourself.
 In his new book, titled Street Smarts, Jim exposes how a law that took effect on January 1 is essentially a sneaky form of currency control. This law will make it nearly "impossible for Americans to open bank accounts outside of the country," he writes.
He tells readers the single indicator he uses to evaluate a foreign country's economy, and he shares the two most exciting economies in the world today.
And most important, Jim tells readers specific assets they can buy to profit from government money printing... In the book, he explains two real assets you can buy today that could quadruple over the coming years... He calls one of the assets "one of the more important assets of any kind." And it's a great investment today, thanks to a recent advancement in technology.
 To learn how you can receive a copy of Street Smarts for free, click here... We only bought a small number of these books, so act quickly.
S&A Research

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